Ciref gets new investment to restructure from South Africa

Ciref Plc, the London-based AIM-listed property investment vehicle, is seeking to raise £38million with a placing of new share to repair it's balance sheet after reporting full year net losses which rose to £39.71million - up from £28.04million last time..

If the placing is successful, it will enable the group to restructure a number of shopping centre schemes it had owned with former joint venture partner, Salford-based Modus Group,

Ciref will remain listed on AIM and will become the international expansion vehicle of the new majority shareholder Redefine Income Fund Ltd, a South African property fund listed on the Johannesburg Stock Exchange. It will be renamed Redefine International Limited.

Michael Watters of Ciref said: "This transaction will allow Ciref to restructure a number of shopping centre schemes, including certain previously owned in conjunction with our former JV partner Modus Group, as well as providing a strong platform for us to pursue other investment and asset opportunities.”

Ciref invests in commercial real estate primarily in the UK and Europe, with a focus on retail and commercial assets. It has interests in various retail and shopping centres including the Birchwood Shopping Centre in Warrington, Delamere Place in Crewe and West Orchards in Coventry.

Ciref has also bought one of its former shopping centres out of administration following the administration of Modus Ventures, its joint venture partner, the Grand Arcade Shopping Centre in Wigan out of administration with the consent of lender Aviva Commercial Finance.

Profit from core operations at Ciref increased by 21.9% to £6.67million (2008: £5.47million) but there were losses on property investments of £41.69million and interest rate swaps of £6.13million, comprising realised losses of £18.64million and unrealised losses of £29.18million.

The firm had net cash of £15.5million at the end of September - down from £17.9million last time.

Chairman Gavin Tipper said the banking and credit crisis which began in late 2007 continued to affect the group in the year to the end of September.

The crisis, which led to the value and liquidity of many asset classes being severely affected, significantly affected the availability of finance for real estate acquisitions and investment.

He said: "Against this backdrop Ciref performed solidly at an operational level and continues to be managed conservatively, with an emphasis on preserving cash.

"The group remains financially sound despite the significant write-downs in asset values, the substantial mark to market losses on interest rate swaps and the demise of its former development joint venture partner, the Modus group."

Ciref has now written off all its investments that it had with Modus in joint venture including its interests in shopping centres and developments – Trinity Walk in Wakefield, Houndshill in Blackpool and Friars Walk in Newport.

Ciref is in talks with the administrator of Blackpool and said: “Discussions continue with KPMG, the administrator, in an attempt to acquire the Blackpool scheme in some form.”

Ciref said the assets in Newport would be acquired by Newport City Council under its CPO powers. The development is then expected to be put out to the market in a re-tender.

Ciref said it is still to decide whether to make a bid at a later date.

A Manchester-based team from Pinsent Masons advised Ciref, led by corporate partner Howard Gill assisted by Chris Moss (partner), James Fitzgibbon (solicitor) and Helen Loizou (trainee).